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Institutions and Performance of Regulated Firms: Evidence from Electric Utilities in the Indian States

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  • Tooraj Jamasb

    (Durham University Business School, Durham University)

  • Manuel Llorca

    (Durham University Business School, Durham University)

  • Pavan Khetrapal

    (Department of Electrical Engineering, National Institute of Technology, MANIT-Bhopal, India)

  • Tripta Thakur

    (Department of Electrical Engineering, National Institute of Technology, MANIT-Bhopal, India)

Abstract

It is commonly accepted that institutions influence economic development of countries. But, can we also trace the effect of institutional endowment to specific sectors and regions of a country? There is a significant gap in knowledge and evidence of this issue in the literature. This paper examines this effect in the Indian electricity distribution sector and explores the influence of state-level institutional quality and economic factors on the performance of network utilities in India. Since the 1990s, India has adopted reform steps to improve the efficiency of its electricity sector. However, there remain performance differences among the utilities. We examine the performance of 52 electricity distribution utilities in 24 Indian states for the period from 2006-07 to 2011-12. The findings confirm that the quality of institutions and state-wide economic development affect the performance of the electricity distribution utilities in different states. Additionally, we simulate the cost savings from utilities’ performance improvements linked with institutional enhancements. The results indicate the need to strengthen the institutions, for example through regulatory agencies reform to improve the performance of the sector.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Tooraj Jamasb & Manuel Llorca & Pavan Khetrapal & Tripta Thakur, 2018. "Institutions and Performance of Regulated Firms: Evidence from Electric Utilities in the Indian States," Working Papers EPRG 1809, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
  • Handle: RePEc:enp:wpaper:eprg1809
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    2. Bhatt, Brijesh & Singh, Anoop, 2021. "Power sector reforms and technology adoption in the Indian electricity distribution sector," Energy, Elsevier, vol. 215(PA).
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    5. Kathuria, Vinish, 2021. "Impact of institutional reforms on the performance of distribution utilities in India – A dynamic panel data analysis," Energy Policy, Elsevier, vol. 158(C).

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    More about this item

    Keywords

    Quality of state institutions; electricity distribution in India; heteroscedastic stochastic frontier models; inefficiency determinants.;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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